BANK OF E ASIA(HK:00023) 智通财经网·2025-08-22 02:22Core Viewpoint - CICC maintains its forecast for East Asia Bank (00023) and raises the target price by 25% to HKD 14.12, reflecting a 4.4% upside potential based on 0.4X P/B for 2025E/2026E [1] Group 1: Financial Performance - The company's 1H25 operating income decreased by 2.1% year-on-year, in line with expectations, primarily due to the decline in HIBOR compressing interest margin [1] - Net interest income for 1H25 fell by 10.7% year-on-year and 11.5% quarter-on-quarter, slightly more than peers, due to concentrated credit exposure in Hong Kong and mainland China, where interest rate cuts have pressured margins [2] - Non-interest income showed strong performance, with other non-interest income up by 50.5% year-on-year, driven by foreign exchange gains; fee income reached HKD 1.65 billion, up 16.6% year-on-year, benefiting from high demand in cross-border wealth management [3] Group 2: Credit Quality and Provisions - Credit costs have decreased from high levels, contributing to better-than-expected net profit; provisions for 1H25 were down 11.9% year-on-year, with a credit cost of 0.95% [4] - The non-performing loan ratio decreased by 9 basis points to 2.63%, while the provision coverage ratio slightly declined to 37.3% [4] - The company remains cautious about future credit costs, expecting them to not be lower than 1H25 levels, considering potential asset quality deterioration in both Hong Kong and mainland China [4] Group 3: Dividend and Capital Management - The company maintained a stable dividend of HKD 0.39 per share for 1H25, with a dividend payout ratio of 45.3%, consistent with previous years [5] - Starting in 2025, Hong Kong banks will adopt Basel III, leading to a 25% year-on-year decrease in RWA and a 6.1 percentage point increase in the core Tier 1 capital adequacy ratio to 23.7% [5] - The company prioritizes maintaining a capital buffer for future economic conditions over directly increasing shareholder returns [5]